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What Makes a Personal Care Company Successful? - Part I What Makes a Personal Care Company Successful? - Part I
by Murray Hunter
2012-12-21 10:13:35
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Personal care with its artisan beginnings is one of the oldest FMCG industries in existence. The craft began more than 2,000 years ago with skilled artisans producing candles, soaps, and fragrances, very highly valued products by those who could afford them at the time. These collected crafts emerged into a mass consumer industry by the middle of the 20th century. Over the last 25 years the industry has again undergone some massive structural changes. Today the personal care industry could be considered highly concentrated throughout each stage of the supply chain. Yet paradoxically, the industry is now more fragmented and layered than ever before, if one knows where to look. This leads to the question of “what is needed to make a personal care company successful in today’s environment?”

Personal care items range from products that are important to a person’s hygiene, to those that are used purely to enhance self image and develop a persona for others to see. Consequently people tend to use personal care products for reasons other than the primary functions, i.e., hygiene or colour, etc. Personal care products have something to do with acceptance, approval, image, and hope. When an underdeveloped economy progresses towards development, one of the first consumer sectors to emerge is the personal care industry. This shows the importance of these products, although many are considered luxury items. In addition the industry is also one of the heaviest users of media advertising.

What constitutes personal care products has become very blurred in recent times. Personal care products take on the characteristics of cosmetics, fragrance, aromatherapy products, pharmaceuticals, and even insecticides. A very rough breakdown of personal care categories are listed in table 1.

Table 1. A breakdown of personal care product categories.

1.  Skin Care products

1.1 Bath products

1.2 Skin cleansers

1.3 Skin care products

1.4 Eye care products

1.5 Lip care products

1.6 Nail care products

1.7 Feminine hygiene products

1.8 Foot care products

2.  Products with special efficacy

2.1 Sunscreen preparations

2.2 Skin tanning preparations

2.3 Skin beaches

2.4 Insect repellents

2.5 Insect bite lotions

2.6 Deodorants

2.7 Antiperspirants

2.8 Acne care products

2.9 Depilatories

2.10 Shaving cream

2.11 Perfumes

3.  Oral care Products

3.1 Oral hygiene products

3.2 Denture cleaners

3.3 Denture adhesives

4.   Hair care products

4.1 Shampoo

4.2 Hair care products

4.3 Hair setting products

4.4 Hair care products

4.5 Hair setting products

4.6 Hair waving products

4.7 Temporary and permanent hair colourants

The concept of success

When looking at what makes a successful company, one has to first define what success means. To simply say success is about market-share, sales, market domination, brand recall, profit, and ROI would be too simplistic and fail to recognize that companies and enterprises are as much about their founders, as they are about the products they make, sell, market, and distribute. Success is related to the ambitions, aspirations, and visions of the founder. The founder may just love being part of the industry and delight in producing batches of the finest hand-made soap, or the most beautiful natural perfume. His or her love may be serving a very important customer as a contract manufacturer, and lifestyle is the key to the person’s own image of success. Too many “MBA’s” dismiss the importance of craft and smallness, and are prepared to write off these manufacturers as irrelevant to the market. Nostalgically these artisans are the remains of our spirit and for that reason alone those keeping the craft going are highly successful individuals with ‘golden enterprises.”  

Thus the scale of the business is important when defining what success is. As mentioned above for many micro-SMEs it’s about the craft. Income enables the enterprise to continue providing the founder with the ability to practice his or her craft. This can be seen with many small hobbyists, those eco-tourism farms producing specialized soaps and lotions, and natural perfumers all around the world. Their success is being able to do what they love.

Many family based businesses probably started off as a craft based organization and grew to something much larger over the last couple of generations. Unfortunately, family based businesses are a dying breed and have to compete against conglomatized multinationals. To a great degree, family based businesses continued success is about survival and competing against much stronger adversaries.

Then finally there are the multinationals themselves, primarily conglomerates of brands that think in-terms of market dominance, high market-shares, high volumes, distribution matrixes, profit and return on investment. Their success criteria is easily measurable with the standard business performance measurements of the day, with sustainability, ethical compliances, and developing low carbon footprints for their products and firm as added criteria.

Success is actually a very relative concept. It really has more to do with the personal ambitions of a founder or the corporate objectives of a large firm. The rest of this article will look at the areas where a firm must develop competencies and capabilities to be successful according to whatever vision founders and managers may have.

Some of the characteristics of success

The market modus operandi the founder chooses for the firm can be seen through the products placed into the market. This reflects both the opportunities the founder/managers perceive and the identity that the firm wishes to develop and project. This is the living essence or “soul” of the company, reflecting the ideas, values and mission of the firm. It starts with the branding, product and sales narrative, right down to the types of packaging, raw materials and service policies that support the firm’s operations. The essence or soul of the company can be seen in ‘the way people within the firm do things’.

Firms have a choice of three basic market types to enter and participate in.

The firm may enter the first level focusing on contract manufacture for other marketing and retailing companies. Within this domain successful contract manufacturers are technically savvy, fully understand what their customers require, and are able to produce products of high quality, very effectively. Success here comes from being able to foresee the needs of others with the competency to fulfill them. To a customer, a supplier that efficiently and effectively services their needs can be considered a source of competitive advantage. Reputation as such will bring many potential customers to your doorstep.

At the second level a firm may manufacture their own branded products for specified markets. This is where the majority of personal care companies exist, within some layer of the mass market in either, discount, supermarket, pharmacy, salon, or branded store markets. Each market layer will have a particular set of idiosyncrasies or culture which must be adopted and adhered to in order to be successful. At this second level firms take a functionalist approach working back from what managers believe consumers want. Product attributes are focused toward providing efficacy with a sense of value for money. This is a very competitive area because usually most companies make the same or similar conclusions about what they believe consumers need.

At the third level, firms and the products exist for some basic reason that becomes the whole persona about what they do. The products exist on some deep passion and belief. The products represent the beliefs and values the founders want to share with their customers. This is very different from the second level where managers try to read what consumers want, a passive reactive approach, rather than proactive creativity required at this level in actually creating new market space.

In this third case products are innovatively constructed with a theme; be it sustainability, ethics, Halal, ethnic, natural, and so on. It is in this area where the rewards are very high for young companies with great ideas, like we have seen with concepts espoused by likes of Aveda, The Body Shop, and Thursday Plantation, among many others for example over the years. One must remember that this is a very high risk strategy. Very few succeed. For every successful company there are hundreds of failures and if you are not totally committed to your cause, consumers will eventually find out and punish you severely.

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Part I - Part II

 


     
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